Answer:
C. 4.91%
Explanation:
The effect of frequent compounding is to increase the nominal interest rate by a small factor. For interest rates in a practical range (<20%/year), the effective increase in rate will be approximately half the original interest rate.
Approximation
For an interest rate of 4.8%, we expect the compounding to increase it by less than 2.4%. The maximum effective rate due to compounding is approximately (4.8%)(1 +2.4%) ≈ 4.91%.
Exact computation
For nominal annual rate r compounded n times per year, the effective annual rate is ...
r' = (1 +r/n)^n -1
For r = 0.048 and n = 12, this becomes ...
r' = (1 +0.048/12)^12 -1 = 1.004^12 -1 ≈ 1.049070208 -1 ≈ 4.91%
__
Additional comment
After you have worked with interest compounding for a bit, you realize compounding increases the effective rate by a small amount. That means the value will be more than 4.8% (eliminating choices A and D), but certainly will not be as high as 10% (eliminating choice B). The only reasonable choice is C, which happens to be the correct one.